The National Retail Federation (NRF) hosted the third and final day of its Big Show on Wednesday. NRF day three wrapped up many of the key retail topics discussed earlier in the conference. Speakers at the Big Show discussed some tangible ways artificial intelligence (AI), crime, and economic trends are impacting retailers.
Digital Commerce 360 followed the most important stories discussed on the Javits Center floor in New York City. These are the top ecommerce stories from NRF day three.
Tractor Supply shares AI applications
Tractor Supply Company CEO Hal Lawton started off the day with a keynote session about the retailer’s rapid growth. The chain nearly doubled revenue since the pandemic, and it just reached $1 billion in ecommerce sales, he said.
Lawton also addressed one of the biggest topics of the conference: AI and its applications for retailers. He likened the discussion around AI today to conversations retailers had about the internet in the early 2000s. This time around, though, retailers aren’t asking “When is this going away?” — but rather, “How can we use this?”
Tractor Supply Co. is already using AI in several ways, both customer-facing and behind the scenes. The retailer is using AI to write marketing copy as well as machine learning in supply chain and inventory replenishment.
Customer service is one of the largest applications for generative AI at Tractor Supply so far, Lawton said. It used Microsoft’s Azure OpenAI toolkit in its internal GURA customer service platform. GURA uses AI to scrape Tractor Supply’s web and training materials. Then, workers can ask questions about customer inquiries, such as “What dog food is good for sensitive skin?” It then answers with specific SKUs available in that store, and can answer follow-up questions to narrow down the results.
Tractor Supply also uses computer vision to allocate labor in stores more effectively. Security cameras located over the checkout use machine learning to determine if another cashier is needed based on how many customers are in line and how many items they have.
Tractor Supply is No. 99 in the 2023 Digital Commerce 360 Top 1000, a ranking of North America’s leading retailers by online sales.
Saks addresses organized retail crime
Saks president Marc Metrick ended his session by addressing crime, a topic that other speakers addressed less directly throughout the show. Metrick called organized retail crime a “huge issue” facing his business and luxury ecommerce more broadly. These crimes directly impact consumer experience in a negative way, he says.
Retailers like Saks have to “put plexiglass over the experience online,” he said, akin to measures taken by retailers like Walgreens in stores, where products are locked behind glass to combat theft. In practice, that means putting additional roadblocks in front of consumers for customer service help, he explained. Walgreens is No. 19 in the Top 1000.
Customer service reports of “merchandise not received” more than doubled in just a few years, Metrick said. In the past, Saks would give that customer a refund or credit for the purchase that never arrived. Now, the retailer has invested in wider fraud protections to determine if that customer has made other similar complaints or has a history of returns.
In December, the NRF retracted a previous statement on the financial impact of organized retail crime. The organization previously attributed nearly half of total retail shrink to the issue in an April 2023 report.
“We stand behind the widely understood fact that organized retail crime is a serious problem impacting retailers of all sizes and communities across our nation,” a spokesperson from the NRF told Digital Commerce 360 in December.
Saksfifthavenue.com is owned by Hudson’s Bay Co., which ranks No. 28 in the Top 1000.
Retailers try to emulate strategies of Shein and Temu
U.S. retailers can learn important marketing lessons from Shein and Temu, Jason Goldberg, chief commerce strategy officer at the Publicis Group, told attendees. Both retailers have strong paid and organic social media driving their growth, he said. A diverse affiliate program is behind many of these posts on platforms like TikTok, and drives sales, says Coresight Research CEO Deborah Weinswig.
Shein and Temu are also adept at gamifying shopping, Weinswig said. She pointed to features like virtual gift boxes, spinning wheels for discounts, and awarding points to customers for making purchases and leaving reviews.
Goldberg praised the way Shein and Temu created trust with U.S. consumers as unfamiliar brands. Both offer free shipping and returns, and a shipping on-time guarantee. Making these promises to consumers helps make the case for purchasing from them versus a legacy brand, he says.
Goldberg warned U.S. retailers not to discount Shein and Temu as real competitors, especially as they expand into new categories.
Shein is No. 2 in Digital Commerce 360’s ranking of ecommerce retailers in Asia. Temu, which Pinduoduo owns, launched in 2022 and isn’t yet reflected in rankings. Pinduoduo operates an app-only marketplace for Chinese consumers. Because it doesn’t operate an ecommerce website, it is not included in Digital Commerce 360’s Asia Database.
Catch up on Digital Commerce 360’s other daily recaps from the 2024 NRF Big Show:
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